After spending $300,000 for research and development, chemists at Diversified Citrus Industries have developed a new breakfast drink. The drink, called Zap, will provide the consumer with twice the amount of vitamin C currently available in breakfast drinks. Zap will be packaged in an eight-ounce can and will be introduced to the breakfast drink market, which is estimated to be equivalent to 21 million eight-ounce cans nationally.

One major management concern is the lack of funds available for marketing. Accordingly, management has decided to use social media to promote Zap in the introductory year and distribute Zap in major metropolitan areas that account for 65 percent of U.S. breakfast drink volume. The cost of the social media campaign (excluding coupon returns) will be $250,000. Other fixed overhead costs are expected to be $90,000 per year.

Management has decided that the suggested retail price to the consumer for the eight-ounce can will be $0.50. The unit variable costs for the product are $0.18 for materials and $0.06 for labor. The company intends to give retailers a margin of 20 percent off the suggested retail price and wholesalers a margin of 10 percent of the retailers cost of the item.

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At what price will Diversified Citrus Industries be selling its product to wholesalers?

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What is the contribution per unit for Zap?

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What is the break-even unit volume for Zap in the first year?

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What is the first-year break-even share of market for Zap?